Auctions

IAA Catastrophe Unit Ready for Hurricane Irma

September 11, 2017
• by Eric Gandarilla

Screenshot via NOAA.

Preparations for Hurricane Irma had been made long before the hurricane made landfall in Florida.

Extra land — meant to store the surge of water-damaged vehicles from potential storms — was secured earlier this year in Florida and neighboring states; a network of over a thousand tow trucks had been assembled for Hurricane Harvey and was ready to mobilize for Irma; and a volunteer group of 50 first responders were ready to aid in the post-hurricane relief efforts.

By Friday, days before the storm reached Florida, these 50 first responders were already in the outlying areas of where the storm was expected to hit, waiting for it to be declared safe to enter so they could move in and begin aiding in Insurance Auto Auction’s (IAA) — KAR Auction Services' salvage auction arm — vehicle recovery efforts.

Initial reports forecast Hurricane Irma to reach Florida as a Category 5 hurricane. Irma made landfall in Florida at Cudjoe Key as a Category 4 hurricane and as it made it's way north it gradually weakened to a Category 2 hurricane.

Many of the Florida cities along the storm's path are still without power, some of the large construction cranes looming over the cities have been toppled, and parts have been flooded, however, the damage is expected to be less than that of Hurricane Harvey.

As the storm moves north through Florida, it's expected to pass through Georgia, Alabama, and Tennessee.

“We’ve been prepared in that area. We have specific space that remains empty in preparation of a catastrophe event. [However,] we are going to have to get more, simply because the storm is as big as it is,” said Jeanene O’Brien, senior vice president, Global Marketing for IAA.

IAA has two locations in the Miami area, both were closed in preparation of the storm. One auction site in Savannah, Ga. was also closed to ensure the safety of employees.

IAA’s Catastrophe Response Strategy

Ensuring that the company has enough acreage to house and store the influx in vehicles to their auctions after a storm is only one component of IAA’s catastrophe response strategy. In total, the company’s catastrophe response strategy has three core components: real estate, transportation, and human resources.

Having enough land to store water-damaged vehicles is important because the amount of vehicles that IAA recovers after a storm can at times be triple or quadruple the amount of vehicles that its auctions normally get.

In Houston, for example, the company’s two auctions take in an average of 1,000 vehicles a day. After the storm, the auctions were seeing anywhere between 3,000 and 4,000 vehicles.

This is why IAA announced it had secured 22 additional locations across 10 states earlier this year. The company didn’t know how big the storms were going to be this year, or where exactly they were going to hit. What it did know was that there are areas in the U.S. that have a propensity for natural disasters and that preparing in those areas would be beneficial.

The damage caused by past storms also gave the company an approximation of what kind of damage was possible.

“What those spaces do to help us is get an amazing front-end process going, so we’re not without space. We can get moving on assignments, get volume moving in at the same time that we’re looking to secure additional real estate,” said O’Brien.

The company also leverages its connection with the companies under the KAR Auction Services umbrella. In Houston, the company is using ADESA Houston and ADESA Austin to store water-damaged vehicles caused by the unprecedented storm.

So far this year, two of the states —Texas and Florida — where the company secured additional land have been devastated by storms. The secured land in bordering states, such as Louisiana, Georgia, and South Carolina will also help store the influx of vehicles.

The second core factor in IAA’s catastrophe response strategy, transportation, focuses on having the appropriate amount of vehicles to recover and transport the surge in water-damaged vehicles. IAA has a nationwide towing network with about 900 day-to-day towing trucks in it. For Hurricane Harvey, IAA recruited from this existing towing base in addition to outside towing networks.

“Right now we have an excess of 1,000 vehicles on the road today in Houston picking up cars and delivering them to our holding facilities. And we will expand that network very quickly. We go through a very strategic deployment process so we can begin to get people on the ground very quickly and as the volume builds over days, we can build the towers along with that process,” said O’Brien.

The last component, human resources, revolves around having sufficient manpower to aid in the recovery process.

The 50 first responder volunteers within IAA are only the first wave of employees to go into an area hit by a catastrophic event. Hundreds of employees from IAA, as well as from KAR Auction Services, volunteer in addition to the 50 first responders.

During the Hurricane Harvey vehicle recovery process, approximately 500 employees volunteered. These volunteers do things such as direct tow traffic, direct where vehicles are put in yards, interface with the towing trucks that are coming in, provide dispatch to towing trucks, and more.

Houston

IAA has two auctions located toward the northern end of Houston. Due to their location, both auctions were able to get through the hurricane essentially unscathed, said O’Brien.

However, while its auctions were fortunate enough to avoid direct damage from the storm, damage to the rest of the city has been massive, O’Brien noted.

“The devastation is very real, it is very significant in some neighborhoods. Everything from a foot of flooding to the entire house submerged. Many of the cars affected were fully submerged, if not over 50% submerged. It’s massively disrupting, you’re not just dealing with a flood that’s affecting vehicles, you’re dealing with a flood that is affecting people’s homes, their memories, it is very significant,” said O’Brien.

IAA’s employees are among those who have had their lives disrupted by Hurricane Harvey. Many of its employees were devastated by the storm, some losing their homes and vehicles, and the company is ready to give them all the time they need to pick their lives back up.

Any employee that affected by the storm is allowed to take as much time away from work to stabilize their life and IAA will continue to pay them as if they were in the office.

“They continue to be paid as if they were in the office and we do anything we can. From support finding them temporary housing, to rental, and so forth. We manage on an individual basis for what our employees need,” said O’Brien.

Now that the rain has stopped falling, IAA is in recovery mode in Houston. Insurance companies that it works with have been sending assignments to IAA to recover vehicles that its policy holders have sent claims for.

Certain areas of Houston are still under standing water, leading to some highways continuing to be closed. This has resulted in staggered, but constant, claims being sent to insurance companies. The number of claims being sent to insurance companies is so large, however, that the insurance companies have not been able to process through the volume.

Due to this, IAA is unable to give a final number of vehicles that have been affected by flood damage just yet. Estimates range from 200,000 to 500,000, which includes dealer cars. What the company can say is that it expects the volume of vehicles affected by flood damage and heading to its auctions to be in the ballpark of what came in after Hurricane Sandy.

“We are in that front line of response and we get those vehicles out of the way. You can’t move a home, but you can move a car. Given everything these people are going through in a community, to make just that simple of a move to give them space and relief, to help them begin their recovery process is really what we’re here to do,” said O’Brien.

The nation's largest wholesale vehicle auctions, including Manheim and Adesa, have shifted to digital-only auctions and taken other precautions to protect the facilities from Hurricane Dorian's possible landfall later this week.